December 21, 2007

INFORMATIONAL

TO:

Division Superintendents

FROM:

Billy
K. Cannaday, Jr.

Superintendent of Public Instruction

SUBJECT:

2008-2010 Biennial Budget
as Introduced by Governor Kaine

Governor Kaine presented his 2008-2010 biennial budget on
Monday, December 17, 2007, before a joint session of the Senate Finance, the
House Appropriations, and the House Finance committees.This budget will be considered by the 2008
Session of the General Assembly, which is scheduled to convene on January 9,
2008.The Governors introduced budget
for the 2008-2010 biennium covers fiscal year 2009 (which begins July 1, 2008,
and ends June 30, 2009) and fiscal year 2010(which begins July 1, 2009, and
ends June 30, 2010).The introduced
budget bill containing Governor Kaines budget recommendations for the
2008-2010 biennium is House Bill/Senate Bill 30.

The Governors recommendations for the 2008-2010 Direct Aid to Public
Education budget include increased state funding for biennial rebenchmarking
updates, as well as funding for new initiatives.The Governors proposed budget provides
funding for the state share of all Standards of Quality (SOQ) programs, and the
continuation of all existing incentive, categorical, school facilities, and
supplemental education programs in Direct Aid.Overall, total state funding for public education in the 2008-2010
biennium will increase by approximately $1.1 billion over the fiscal year 2008
base.

Attachment A to this memorandum provides a summary of the
funding changes proposed by the Governor for the 2008-2010 Direct Aid
budget.Budget
proposals for the departments Central Office budget that pertain to school
divisions are also summarized in Attachment A.Key recommendations in Governor Kaines 2008-2010 introduced budget
impacting public education funding include:

technical updates to
continue and revise the SOQ, incentive, categorical, and school facilities
funding for the most recent funded salary amounts, prevailing support
costs, inflation, enrollment projections, and other updates;

new composite indices
for the 2008-2010 biennium;

new sales tax and
Lottery revenue estimates;

revisions to the
employer rates for fringe benefit contributions paid to the Virginia
Retirement System (VRS);

continuation of the SOL
Web-based Technology Initiative funded through Virginia Public School
Authority (VPSA) note proceeds;

continuation of the
Literary Fund Interest Rate Subsidy program to support school construction
over the biennium;

a 3.50 percent
compensation supplement for instructional positions and a 3.0 percent
compensation supplement for support positions funded in the SOQ and other
state-supported programs, effective July 1, 2009, in fiscal year 2010;

an expansion of the
Virginia Preschool Initiative;

new incentive funding
for data coordinators in at-risk high schools;

additional funding for National
Board Certification bonuses, Career Switcher Mentors, and the Virtual
Virginia program.

Attachment B to this memorandum lists the projected entitlements
for each school division for the SOQ, incentive, categorical, and school
facilities accounts for fiscal years 2009 and 2010 based on the Governors
introduced 2008-2010 budget.The projected
entitlements shown in Attachment B are based on the Department of Educations
latest projections of March 31 average daily membership (ADM) for fiscal years
2009 and 2010 only and cannot be modified.The entitlements shown in Attachment B do not include the supplemental
education grants authorized by the General Assembly that are unique to certain
school divisions.Several of the
categorical account entitlements shown in Attachment B are funded on a reimbursement
basis and represent the departments latest projected entitlements; however,
final payments on these accounts in fiscal years 2009 and 2010 will be based on
actual, eligible reimbursement requests submitted by school divisions and
approved by the department.

In addition to the entitlement information contained in
Attachment B, a downloadable Excel file has been created to assist school
divisions in calculating projected state entitlements and required local
matches in fiscal years 2009 and 2010 for most Direct Aid programs.This file gives divisions the opportunity to
change ADM to test the effect on projected state funding and projected local
match requirements using the departments projected ADM or a local projection
of ADM.(Attachment B contains projected
entitlement information for each school division in PDF format based on the
departments projected ADM only and cannot be modified.)

Although we have confidence in the accuracy of our ADM
projections on a statewide basis, experience has shown that the accuracy of our
projections for individual divisions may vary.When divisions believe that they have more accurate projections of their
March 31 ADM, they are encouraged to substitute their estimates for those
provided in this memorandum when using the Excel calculation file.Please note that changing the ADM value in
the Excel file only changes the estimated funding for accounts that are funded
on the basis of ADM.The estimated
funding for all other accounts is unaffected by changing ADM in the Excel file
and, therefore, remains the same.

Also
note that sales tax estimates in the Excel calculation file are revenue
projections only.Actual sales tax
payments made to school divisions in fiscal years 2009 and 2010 on a
semi-monthly basis will be based on actual sales tax receipts.However, pursuant to the appropriation act,
the Basic Aid entitlement calculation is based on the estimated sales tax
appropriation only and is not adjusted for actual sales tax revenues received.

Attachment C to this memorandum provides detailed instructions
for accessing the Excel calculation file from the Department of Education Web
site.The Excel file may be downloaded
from the following Web address:

Attachments D and E summarize several of the major data inputs
that are updated in the calculation of Direct Aid accounts for the 2008-2010
biennium.Attachment D lists the sources
of various input data updated for the 2008-2010 biennium; Attachment E shows
the SOQ funded instructional salaries used for the 2008-2010 biennium.

It is important to remember that the information provided in
Attachment B and in the Excel calculation file relates to the Governors
2008-2010 biennial budget as introduced.The House of Delegates and the Senate will have the opportunity to amend
the Governors budget proposals during the 2008 General Assembly session.The General Assembly will adopt a final
2008-2010 biennial budget before the end of the 2008 session, which is
scheduled for March 8, 2008; therefore, the projected entitlements contained in
Attachment B and in the Excel calculation file are projections only and are
subject to change as a result of legislative action by the 2008 General
Assembly.

The department will provide additional information during the
General Assembly session as changes to the estimated Direct Aid entitlements
occur.After the conclusion of the
session, projected entitlements based on final General Assembly actions will be
sent to you in another Superintendents Memorandum.Please note, the actual fiscal year 2009 and
fiscal year 2010 entitlements will be paid on the basis of final costs computed
using actual March 31 ADM and other final program participation information
that applies to each fiscal year and each program.

Questions regarding the Governors introduced budget
for the 2008-2010 biennium and projected Direct Aid entitlements for fiscal
years 2009 and 2010 may be directed to Kent Dickey, assistant superintendent
for finance, or budget office staff at (804) 225-2025.